I would like to start off with thanking you for giving me a reason to relaunch my blog. When I had first started this blog, the plan was to discuss the most ludicrous thing I had heard in a week or a month. I had let it go but watching greedy millionaires argue with even greedier billionaires over how to share BILLIONS...not millions...but BILLIONS...of dollars is just too good a target to pass up.
While it would be fun to spend the whole blog telling you how ridiculous you both sound, as a hockey fan, I want to see games this year, so since you seem unable to come to an agreement, as a solution, I have decided to help you out. As a CPA, CA, here is my solution, which actually took all of about 10 minutes and an excel spread sheet to figure out.
Owners
Here is the issue. In 2004-05, we lost a season because you "fixed" the system. Since then, some of you have spent like drunken sailors, so in short, you made your bed, now you need to live in it and learn from your actions. Perhaps giving one player over $100 million for the next 10 years is not a good idea? It is unfair to ask the players to take a cut again. It is like saying "Hey...we don't know how to manage our affairs. We messed up, so it would be swell if you could let us go back to a level we can afford. Thanks."
Players
You are 100% right when you say fans come out to see you, not the owners, and without you, there is no league. Only time any fan cares to see Gary Bettman is if he is presenting their team with the Cup, and even then, we would probably prefer a model. However, here is the thing. You are employees. In any business, without employees, there is no business. The whole reason there is entrepreneurship is because people feel that instead of making money for someone else, they will use their talents to make money for themselves. Therefore, until such time as you decide to take the risk and start your own league, you need to share with the owners.
Solution
The 50-50 split seems like a reasonable solution. However, the problem is you can not ask players to take such a drastic hit. Therefore, my proposal is to implement the 50-50 split over multiple years by holding players share flat in terms of real dollars, to get to the 50-50 split over time. Based on your assumption of revenues being flat for 2012-13 and then 5% growth in HRR per year thereafter, this would be achieved in year 4 of the agreement.
As HRR does not grow in year 1, it stays at a 57%-43% split as was last year. As revenues grow, and the growth is only given to owners, the owners portion grows until we reach 50-50 in year 4, and players start seeing an increase in their share. The proposal would be owners never get more than the 50%, meaning if HRR grows faster than projected, players share starts growing in real terms more quickly.
The Cap
Part of the problem was that the way the cap was calculated in the old agreement was the min and max was set at the same differential. It was assumed that those spending over the midpoint would be balanced out by those in the other direction by the same magnitude. This was not the case and this is how we ended up with a 57%-43% split for the players, as those spending above the midpoint outweighed those below. I propose the cap be calculated as follows:
Midpoint = HRR of prior year / # of teams
Maximum = Midpoint + 5%
Minimum = 85% of the midpoint
This cap calculation would help the smaller teams and keep the costs overall down as the wealthier teams are more limited as to how much they can spend, not pulling up the total salaries for the league.
My fee
To explain the column my fee, considering how much you much be paying lawyers to "negotiate" to no avail, I figure $0.5 million a year for the life of the agreement is reasonable for getting it done.
In conclusion, I hope this can at a minimum provide a basis to come to an agreement. And on behalf of fans everywhere:
GET YOUR F&#^@*& SHIT TOGETHER AND STOP WITH THE LOCKOUTS!!!!
Michael Lifshitz CPA, CA, MBA
Montreal, Quebec
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